THE EUROPEAN PARQUET INDUSTRIES IN 2005

Parquet remains a popular flooring product throughout Europe, according to the recent
survey made by the European Federation of the Parquet Industry, FEP. Compared to
2004, both production and consumption grew soundly. Due to the fact that some of the
data were still “provisional”, slight adaptations may still have to be made.

The production in the “traditional” FEP area increased by 6.2% reaching yet another
record volume of 79.2 million m². Total production in all countries has reached a volume
of 96 million m², an increase of 4.9% overall. Key to this positive result were the
production increases in Austria, Germany and the Nordic countries. As regards Austria,
the full impact of the capacities installed over the past years has now become clearly
visible in the statistics too.

Consumption, on the other hand, could not fully follow the same tendency, though
consumption overall in 2005 is reported to have increased by another 3.4% compared to
the previous year, not quite attaining the 5% increase forecasted by the federation at the
beginning of the year.

The developments have, however, been differing strongly from country to country.
Whereas Austria and Norway/Finland/Denmark could report impressive growth rates of
+25% and +16% respectively, other markets grew more moderately (from 2 to 4%) or
recorded a decline. This applies in particular to Germany, still the most important parquet
market in Europe, falling 3.3% and Hungary and Poland, where, unfortunately, the
positive development of the home markets has experienced some difficulties in 2005.

Nevertheless, parquet has not only been able to maintain its position on the flooring
market, but even to extend it, and this despite the ever growing competition and most
difficult economic framework conditions.

A striking development in 2005 certainly was the general decline of the “solid” segment
in European parquet production. Mosaic, once the leading product if one looks back to
FEP’s 50 years history, has meanwhile become a niche product. Lamparquet too was hit
hard in 2005, with production decreases in the order of 25%.

This evidently resulted in a further increase in the production of multilayer parquet, the
share of which has grown to over 80% with tendency increasing. It seems as if, within a
reasonably short period of time, any production of solid parquet will take place outside
the FEP area.

In absolute figures, Sweden remains the main parquet producing country in Europe with
a share in production of 19.8% (21.6% in 2004). Germany is back in second place with a
share of 12.2%, and Poland in third (11.9%), closely followed by the Nordic cluster,
Spain and Austria.

With 2.10 m²/inhabitant, Sweden is also the leading pro capita producer, though Austria
has made a major leap forward to 1.15 m². Also the Nordic cluster could improve its
performance. Overall pro capita production increased to 0.24m²/inhabitant.

Consumption in the FEP area is calculated to have increased to just below the
100 million m² mark. This means that consumption has actually doubled from 1990 to
2005. In the “traditional” markets, consumption has risen by 4.2%, in the FEP area in
total by 3.4%.

Adding non FEP member states, it can be assumed that the total market for parquet
flooring in the European Union and EFTA amounts to at least 110 million m².

The most important parquet market in Europe remains Germany. Unfortunately, the
consumption on this market fell slightly in 2005, and it now accounts for 21% of total
consumption. Spain and Italy remain in 2nd and 3rd place respectively. The Nordic Cluster
and Austria could improve their position.

The latter could also build out its lead in the consumption per capita, to reach a level of
0.88 m²/inhabitant. Sweden, the Nordic cluster and Switzerland are the other countries
that surpass the threshold of 0.60 m². Overall consumption per capita in the FEP area
amounts to 0.25 m²/inhabitant.

Use of wood species

The usage rates of wood species for the production of parquet in 2005 are depicted in the
graph below:

Compared to 2004, red oak could improve, and beech declined more than 4%. The use of
tropical timber has remained stable, despite consumer desire for darker floors. The
increased share of heat-treated wood flooring may certainly have played a role in this.

The share of parquet in the total European flooring market

According to Intercontuft, the total consumption of parquet and real wood flooring in
2005 would have amounted to 103 million m², representing a market share of 4.9% of
the total flooring market. Based on the data available, however, this figure seems
underestimated. Consequently, FEP believes that the actual market share of parquet is
well above 5%.

Outlook for 2006

Large parts of Europe have been experiencing a strong winter in the beginning of 2006,
which has had some impact on the construction activity. Parquet consumption, therefore,
may have slowed down to some extent, but is likely to pick up again strongly.
In any case, considering positive indications on the general European economic
performance, a moderate optimism as concerns the market development seems
warranted.
Despite positive market developments and increases in production, the parquet
manufacturers are facing some major challenges affecting their competitiveness. Prices
for wood, glues, lacquers, energy and transport are on the rise and impact the
profitability of the companies, which may be obliged to take adequate measures.

More information on this issue is available from the FEP Secretariat in Brussels.

(Fax: +32 2 556 25 95 / info@parquet.net).

European Federation of the Parquet Industry
Fédération Européenne de l’Industrie du Parquet
Föderation der Europäischen Parkett-Industrie
Allée Hof-ter-Vleest 5, boîte 4, B-1070 Bruxelles
TP: +32 2 556.25.87 - TF: +32 2 556.25.95
E-mail: info@parquet.net - www.parquet.net
VAT BE 552.491.709